December 30, 2007

MicroPlace.com – international microfinancing that yields a return

Pierre Omidyar – founder of eBay – stated at the 2006 eBay Developers Conference that he was focused on international microfinance. It took me a while to understand what he was talking about.

Microfinance is peer to peer lending. You lend $100 to a farmer in Eastern Europe to buy seed and fertilizer or a female store owner in South East Asia to buy goods for a marketplace store. Within a year, they pay you back. The qualified borrowers are very experienced business owners who need money to grow their business.

This photo is of a farmer in Bolivia who borrowed $600 to buy a milk cow. She sells the milk and has repaid $200 of her $600 loan.

eBay acquired MicroPlace.com in October. They pay a return on your investment. Kiva.org is a non-profit and does not yield interest.

There is a company called Prosper.com that offers peer to peer lending for people in the US. I took a quick peek and saw borrowers wanting to consolidate their consumer debt. No way. These are high risk loans to people who don’t know how to manage money. Yuck!